Judge dismisses state's negligence, fraud claims against Flint water consultants

A Genesee County judge has thrown out four of the five claims the state has made in a lawsuit seeking damages from engineering firms used during the Flint water crisis.

Circuit Judge Richard Yuille last week dismissed the state’s claims of negligence, professional negligence and public nuisance against Veolia North America and Lockwood, Andrew and Newnam. He also dismissed a claim of fraud against Veolia.

Yuille allowed the state’s claim of unjust enrichment against the companies to proceed but denied a request to award “exemplary damages” if the state succeeds on the remaining claim.

“If the people’s damages are premised on injuries to the consumers of the city of Flint’s water, then the consumers of the city of Flint’s water are the individuals that ought to be suing for negligence,” the judge wrote.

Initially filed by Republican then-Attorney General Bill Schuette, the case against Veolia and LAN is the only civil case initiated by the state on behalf of Flint residents in the wake of the water crisis. When Democratic Attorney General Dana Nessel took over the case, she said the engineering firms allegedly played “a seminal role” in the Flint water crisis and chided the companies for “denying and shifting responsibility” in recent court filings.

The state has argued that Veolia and LAN, though hired as water treatment experts, “failed to address design flaws in the Flint Water Treatment Plant, failed to account for changing thermal conditions within the water treatment system, and thereafter made multiple missteps by design(ing) water treatment measures that made the water corrosive.”

The state has spent "nearly $350 million to respond to the crisis created by defendants,” according to a court filing this summer.

The companies have maintained they acted responsibly and in good faith about the consulting work they did for Flint. In a Thursday statement, LAN said it was pleased with the judge’s recent ruling.

“With respect to the remaining claims, we are confident of prevailing because a number of investigations determined that actions or inactions by state and local government officials were the cause of the alleged harm asserted by the state in the case,” the company said.

The judge's decision was a rejection of the attorney general's "shameful" efforts to shift blame away from state and local officials and make Veolia into a "corporate villain," Veolia said in a Thursday statement. 

"VNA's good name and corporate reputation are being used as a shield against public outrage directed at the state, the city of Flint and their officials," the company said. "Those same government officials were trying to make VNA a scapegoat, and the court’s decision prevents that diversionary tactic.

Nessel’s office intends to keep pursuing the case, spokesman Dan Olsen said, noting that the judge “preserved our ability” to continue the suit against Veolia and LAN.

“…we intend to aggressively do so while analyzing other potential legal actions that might be taken to ensure the engineering defendants are held accountable for their misdeeds,” Olsen said.

Nessel told Michigan Radio in March that any money won in the cases against Veolia and LAN would go into the state’s general fund, as dictated by law, but said she hoped it could ultimately be used to offset any settlements in the various state and federal civil suits that have been filed against the state after the Flint water crisis.

Because the state provides a free public service in representing the people, Yuille wrote, it is somewhat restrained in what it can claim for “damage to property or economic loss arising out of a response to the crisis.”

But the judge noted there was some viability to the claim that Veolia and LAN retained a benefit from the state that “it is inequitable” to retain and so he allowed the unjust enrichment claim to proceed.

However, he ruled Veolia made no fraudulent statements on which the state relied, and the connection between “the duties allegedly breached and the damages claimed is too attenuated to be sustainable.”

Exemplary damages — or compensation ordered for actions that inspire “humiliation, outrage or indignity” — require the state to also prove negligence or malicious and willful conduct on the part of the engineering firms, Yuille said.  

“As this court has dismissed the counts of negligence, professional negligence and fraud, exemplary damages are inapplicable to the remaining case of action, unjust enrichment,” he wrote.

The dismissal of the charges comes nearly six months after Solicitor General Fadwa Hammoud, who is handling the criminal side of Flint water litigation, dismissed all charges against state employees so her team could have time to review the evidence used to issue the initial charges under Schuette.

Shortly after taking office, Nessel said she would handle the Flint civil cases and fired the special assistant attorney general appointed by Schuette to the Veolia and LAN case, the only civil lawsuit initiated by the attorney general’s office in the Flint water crisis to date.

An attorney representing a majority of the alleged Flint water crisis victims in the Genesee County civil cases protested Nessel’s appointment of assistant attorneys general to the Veolia and LAN case who were also defending the state against other civil suits, arguing the attorneys' dual roles represented a conflict of interest.

Yuille has yet to rule on a motion from the attorney seeking Nessel’s dismissal due of the conflict.

eleblanc@detroitnews.com